Taxes

Minnesota’s business taxes are very competitive and give companies a distinct advantage when it comes to the cost of doing business.

Commercial & Industrial Property Taxes

Property tax rates in Moorhead are based on the assessed market value of the property. Moorhead, as a border city, enjoys rates capped at 1.6%(effective 1/1/2015) of the assessed market value through special Border City Legislation known as the “Disparity Reduction Credit”. To find property tax information on a specific property, please visit Moorhead’s Property Information page.

Moorhead Commercial / Industrial Parcels

Property Value

Gross Tax

Gross

ETR

Net

ETR

% Reduction in Tax

due to DRC

Dollars saved

due to DRC

Net Tax

$100,000

$2,759

2.76%

1.60%

42%

$1,159

$1,600

$250,000

$7,755

3.10%

1.6%

48%

$3,755

$4,000

$500,000

$16,796

3.36%

1.60%

52%

$8,796

$8,000

$1,000,000

$34,878

3.49%

1.60%

54%

$18,878

$16,000

$5,000,000

$179,533

3.59%

1.60%

55%

$99,533

$80,000

$10,000,000

$360,353

3.60%

1.6%

56%

$200,353

$160,000

ETR: Effective Tax Rate – Pay 2018

Corporate Income Tax

Minnesota is currently phasing in a Single Sales Apportionment of corporate income by the year 2014. Minnesota’s lack of a throwback rule(sales to states without income taxes “thrown back” to the taxing state for apportionment purposes)reduces net income, and a generous carry-forward period helps reduce tax liabilities. States such as California and North Carolina have throwback for sales to the U.S. government.

Minnesota has one of the most generous foreign royalty deductions in the country.Minnesota corporations can license technology to foreign corporations and deduct 80% of the foreign royalties they receive if the payer is a member of the unitary group.

Breakdown of Corporate Income Taxes

Corporate Income Tax Rate

9.80% effective tax rate

Apportionment Formula (sales-property-payroll)

100% - 0% - 0%

R & D Credit

Refundable; 10% of first $2 million of qualified expenses and 2.5% thereafter.

Throwback Rule

No

Sales to U.S. Government Throwback

No

Carry forward

Yes (zero back, 15 forward)

Source: MN Department of Employment and Economic Development

Sales & Use Tax

Minnesota refunds sales tax paid on capital equipment used in the manufacturing process. There are several other major exemptions for businesses, including fees for equipment and installation repair, and most services. Utilities, chemicals, and gases used in industrial production are also exempt.

Breakdown of Sales & Use Taxes

State Sales & Use Tax Rate

6.875%

Local Sales Tax Rate – Moorhead

0.5%

Tax on Manufacturing Machinery

No (refunded)

Tax on Utilities

No

Tax on Materials Consumed on Production

No

Tax on Fuels in Production

No

Source: MN Department of Employment and Economic Development

Unemployment Insurance Tax

Minnesota companies with the most favorable employment histories received an unemployment insurance base tax rate of 0.5% in 2012.

Average Unemployment Insurance Taxes in 2018

Taxable Wage Base:

$22,000

Minimum-Maximum Experience Rates

0.5 to 9.4%

New Employer Rate

1.44%

Minimum Time to Experience Rate

18 months ending June 30

Source: MN Department of Employment and Economic Development

Workers Compensation

Private insurers offer coverage, with an Assigned Risk Pool, available for new businesses and those with high-risk classifications. Premium costs range from 33 cents per $100 of payroll for office workers to $5.43 for light manufacturing and machine operators. The City of Moorhead buys down a portion of this expense through the “Worker's Compensation Rebate Program.” Click here for more information about this program.